WASHINGTON (CN) – Forget fears that Russia has mastered the use of information as a weapon, a quartet of experts said on Capitol Hill Thursday, because Russian President Vladimir Putin has something far more fearsome at his disposal: a gift for using corruption to advance his geopolitical goals.
The U.S. got a taste of Russia’s use of information as a bludgeon during the 2016 presidential election, when Wikileaks released stolen and embarrassing emails from Democratic officials at key moments in the campaign to damage Hillary Clinton and boost then-candidate Donald Trump.
But Brian Whitmore, of Radio Free Europe, said the conversation has focused too much on Russia’s nefarious use of information at the peril of ignoring more potent threats.
Whitmore said while corruption has been used domestically for years in Russia to control and maintain the loyalty of the elite, Putin is now using it abroad as “a tool of statecraft.”
“The Kremlin seeks to capture elites and establish networks of influence abroad by ensnaring officials in corrupt deals,” Whitmore said.
He and four other Russia experts offered their assessments of the nation and Vladimir Putin, during “Kleptocrats of the Kremlin,” a briefing sponsored by the Commission on Security and Cooperation in Europe, and presented at the Dirksen Senate Office Building.
According to Whitmore two Russias exist – a kleptocracy ruled by thieves, and an ideological state that Whitmore describes as Putin’s project “to make Russia great again” by restoring the country as a world power.
Whitmore said in addition to corruption, Putin has also effectively nationalized organized crime, a move he says Russian security services help facilitate.
This creates large amounts of untraceable cash that can be used for influence operations abroad, such as weapons smuggling and assassinations.
“Organized crime groups are often pressed into service to perform tasks the Kremlin wants to keep its fingerprints off,” Whitmore added.
Echoing Whitmore, Anders Aslund, a former economic adviser to the Russian government from 1994 – 1999, declared the age of the Russian oligarchy and organized crime are over because Putin has legalized both and incorporated enrichment of the elite into his system of government.
To drive home the point, he highlighted a massive transfer of state wealth in recent years.
Twelve years ago, state corporations constituted 35 percent of Russia’s GDP. That number has jumped to 70 percent today.
Aslund said state companies and those whose owners are in Putin’s close circle are buying up smaller businesses once owned by oligarchs who by law can no longer sell their companies to each other or to foreigners.
In 2007, Aslund said, the Russian president privatized more than $1 billion in Russian assets by converting 6 major state companies to nongovernmental organizations Putin controls.
Each year since 2006, Aslund said, Putin’s inner circle, a coterie of about six people, has siphoned off $10-20 billion in Russian assets.
But Aslund said the West is not blameless for the situation.
He said the money gets funneled through Cyprus and ends up in London and New York via anonymous companies that are most often based in Delaware, but sometimes also in Wyoming, South Dakota and Nevada.
“This should not happen, but it does,” Aslund said.
Making the problem worse, that money passes through law firms rather than through regulated banks.
“At least $40 billion a year goes into this country in this fashion,” he said.
The West has been negligent in dealing with Putin’s corruption, said Ilya Zaslavskiy of the Free Russia Foundation.
In the short term, the best the West can do is to attempt to contain the negative ripples of rampant kleptocracy from post-Soviet countries and work to preserve democratic institutions.
Zaslavskiy and Aslund agreed the term oligarch is outdated because no private business or market economy exist in Putin’s Russia.
“Business in Russia really means state favors, tax breaks, contracts from Kremlin,” Zaslavskiy said. “These ‘oligarchs’ are really now cash handlers of cash flows that are allowed by Putin.”
Putin keeps the elites in check with compromising material and other leverage he holds over them, he said.
But Zaslavskiy also cautioned Russian kleptocracy is no longer a distant phenomenon. It now impacts the U.S. directly.
Strong indications exist that post-Soviet kleptocracy is threatening Western ideals of accountability and good governance, and that corruption is becoming a new accepted norm, he said.
Whitmore offered a similar warning that Russia is using corruption and organized crime as tools to weaken western democratic institutions.
“Corruption is the new Communism,” he declared, adding that Putin spreads it “as a tool of influence.”
“Corruption is a national security issue of the highest order and needs to be treated as such,” Whitmore said.